BorgWarner Earnings Call Transcripts
Fiscal Year 2026
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Global auto production is expected to be flat to slightly down, with regional differences in EV and hybrid adoption. The company is leveraging a diversified portfolio, strong competitive positioning, and new growth in data centers, while maintaining robust financial performance and disciplined capital allocation.
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Record 2025 results included strong margin and EPS growth, major new business wins, and a $300M turbine generator launch set for next year. Strategic focus shifted to balanced growth across all segments, with continued margin expansion, disciplined capital allocation, and global demand for new power solutions.
Fiscal Year 2025
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2025 saw $14.3B in sales, 23% e-product growth, 60 bps margin expansion, and $1.2B free cash flow, with over half returned to shareholders. 2026 guidance anticipates flat-to-down sales, margin improvement, and continued investment in new products, including a $300M+ data center turbine launch.
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Management expects stable outgrowth through 2026, with new program wins and a shift to growth across all business units. Strong cost controls and automation are supporting resilient margins, while free cash flow and disciplined capital allocation remain priorities.
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Management outlined priorities of financial performance, global business wins, and balanced capital allocation, with China driving e-product growth and strong execution on cost controls and margin expansion. M&A remains a disciplined focus, while AI and operational improvements support future growth.
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Q3 saw 2% organic sales growth, strong margin expansion, and robust free cash flow, despite headwinds from tariffs and customer disruptions. Full-year guidance was raised for margin, EPS, and cash flow, with new business wins and disciplined capital allocation supporting long-term growth.
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Tariff exposure has decreased and is being actively managed, while electrification growth is led by China and Europe. Strong e-product launches and disciplined capital allocation have driven margin outperformance and sustained a 10%+ margin profile. Flexible operations and a broad portfolio position the company for continued outgrowth and market share gains.
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Second quarter 2025 saw flat sales year-over-year, but a 31% surge in light vehicle e-product sales and robust free cash flow. Guidance for sales, margin, EPS, and cash flow was raised, and capital returns to shareholders increased, reflecting strong operational execution.
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Strong Q1 results and robust free cash flow set the stage for full-year guidance, with tariff risks mitigated and regional growth led by China and Europe. Operational excellence, flexible capacity, and a disciplined M&A approach support margin expansion and market share gains, while hybrids and e-products drive future growth.
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Strong Q1 performance, reduced tariff risks, and robust growth in China and Europe set a positive outlook. Electrification adoption varies by region, with hybrids and foundational products remaining key. Sustained margins, disciplined capital allocation, and a resilient operating model support continued outperformance.
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Strong Q1 performance was driven by electrification growth in China and Europe, effective tariff management, and disciplined portfolio actions. The company maintains a balanced capital allocation strategy and is well-positioned for industry consolidation and evolving OEM outsourcing trends.
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Organic sales were flat at $3.5B, with 3.7% outgrowth driven by a 47% rise in e-product sales. Portfolio actions included exiting the charging business and consolidating battery capacity, while 2025 guidance was raised for sales and maintained for EPS and cash flow.
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A balanced ICE and EV portfolio, strong customer relationships, and disciplined cost management position the company for growth despite regulatory and tariff uncertainties. China remains a key market, with flexible operations and targeted acquisitions supporting global competitiveness.
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Management outlined a strategy focused on leveraging a resilient, diversified portfolio to drive outgrowth, with 30+ global eProduct launches and strong positions in both foundational and electrified technologies. Margin expansion is supported by cost controls and restructuring, while capital allocation balances share buybacks and targeted M&A.
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Leadership reaffirmed a strategy of leveraging core strengths and pursuing both organic and inorganic growth, with a focus on EV and hybrid launches, especially in China and Europe. Restructuring and disciplined capital allocation are set to drive margin expansion and outperformance across all business units.
Fiscal Year 2024
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2024 saw flat sales at $14B, 10.1% adjusted margin, and $729M free cash flow, with strong outgrowth and new product wins. 2025 guidance projects $13.4–$14B sales, >10% margin, and $650–$750M free cash flow, despite industry and FX headwinds.
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Despite industry headwinds, outgrew market production, improved margins, and returned all free cash flow to shareholders. Portfolio resegmentation highlights foundational strength and e-product growth, with proactive cost control and global flexibility supporting resilience.
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The company has restructured into four segments, balancing foundational combustion and growing e-product businesses, with a focus on operational efficiency and margin expansion. Despite a challenging market, margin and EPS guidance have increased, and strong growth is expected from new program launches and battery pack capacity.
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Q3 saw strong operational performance with a 10.1% margin and $201M free cash flow, despite a 5% sales decline. Full-year margin and EPS guidance were raised, with nearly all free cash flow returned to shareholders. New product wins and cost controls support continued outperformance.
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BEV growth expectations have moderated, but long-term electrification trends remain strong. The company is outperforming peers through technology focus, regional diversification, and disciplined cost management, with restructuring and capital returns supporting robust margins and free cash flow.
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Q2 sales were flat year-over-year at $3.6B, with a 10.4% margin and $1.19 EPS, outperforming market production by 350 bps. 2024 guidance was lowered for sales but raised for margins and EPS, with all free cash flow to be returned to shareholders via buybacks and dividends.
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Strong growth in e-products and battery business is offsetting a stable but mature combustion segment, with China and Europe driving hybrid and BEV adoption. Capital allocation remains disciplined, and the company is well-positioned for industry shifts and supplier consolidation.
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Charging Forward 2.0 centers on eProducts growth, profitability, and maximizing combustion value. The company targets $2.65B in eProduct revenue for 2024, with strong positioning in China and commercial vehicle battery packs. Restructuring and capital allocation support margin and growth goals.